Southwest posts $152 million quarterly profit on strong traffic

DALLAS — Even with a tough economy and high jet fuel prices, Southwest Airlines Co. made money in the fourth quarter and could do better this year.

Travel demand was strong enough in the final three months of 2011 for the carrier, easily the busiest at McCarran InternationalAirport, to keep planes nearly full and raise fares.

Through November, Southwest has served 14.69 million passengers at the local airport, an increase of 1.7 percent from the previous year.

The carrier’s fourth-quarter net income rose 16 percent to $152 million, and profit was slightly higher than analysts expected. Revenue jumped to $4.11 billion.

CEO Gary C. Kelly said he expects strong revenue in the first quarter too, based on passenger-booking trends.

People travel more when the economy is strong, and there are signs that growth is recovering from the 2007-2009 recession.

Auto sales picked up late last year. U.S. factory output rose sharply in December. And the stock market is up — the Dow Jones industrial average has gained 3 percent so far in 2012.

“2012 is going to be better for Southwest. It’s going to be a good year for the airline industry,” said Ray Neidl, an analyst with Maxim Group LLC. “The airlines can double their profitability” over 2011.

Neidl said that’s possible — even with just modest economic growth — because airlines are limiting flights, which keeps planes full and lets them raise fares.

In the fourth quarter, Southwest filled more than 80 percent of its seats, an unusually high percentage. And the average passenger paid a fare of $140.18, up 10 percent from a year earlier when including price increases at its AirTran Airways subsidiary.

At Southwest and most other airlines, the biggest challenge to making money will be high jet fuel prices.

Southwest paid 34 percent more at the pump to fill its fleet of Boeing 737s, and its fuel tab came to $1.49 billion for the final three months of the year. Fuel averaged $3.29 per gallon.

And there’s little relief in sight. Southwest expects to spend $3.35 per gallon in the first quarter, up 14 percent from the same period last year.

Southwest tries to protect itself from fuel price spikes by hedging — in effect, locking in some of its fuel spending at guaranteed prices.

All of Southwest’s increase in fourth-quarter net income came from gains on fuel-hedging contracts. Without those one-time gains, Southwest’s adjusted profit was $66 million, or 9 cents per share, down from $115 million, or 15 cents, a year earlier.

Still, the results beat analysts’ prediction of 8 cents per share, according to FactSet.

Southwest shares rose 30 cents, or 3.3 percent, to $9.32 in midday trading.

With the addition of AirTran Airways, which Southwest bought last year, revenue rose to $4.11 billion.

Southwest paid $1.4 billion for AirTran, which allowed it to expand into Atlanta, Mexico and the Caribbean, but it said Thursday that the cost of combining the two airlines will end up at $500 million. The company said it saved $80 million in overlapping expenses in 2011 and expects the annual savings to go much higher.

Southwest, which carries more passengers in the U.S. than any airline, was the first major U.S. carrier to report fourth-quarter results. United Continental Holdings Inc., Delta Air Lines Inc. and US Airways Group Inc. will release their figures next week, and analysts expect all three to show operating profits for the usually weak fourth quarter.

AMR Corp.’s American Airlines is expected to report a loss and to keep losing money in 2012. The company filed for bankruptcy protection in November and has begun trimming marginal flights, which could push some travelers to its more-successful competitors.

ad-high_impact_4
Business
The Venetian gondoliers sing Italian songs
Gondolier Marciano sings a the classic Italian song "Volare" as he leads guests through the canals of The Venetian in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal)
Building In Logandale
Texas homebuilder D.R. Horton bought 43 lots in rural Logandale. (Eli Segall/Las Vegas Review-Journal)
Indoor farming in Southern Nevada
Experts discuss Nevada's indoor farming industry. (Bailey Schulz/Las Vegas Review-Journal)
Former Fontainebleau could have become a Waldorf Astoria
Months after developer Steve Witkoff bought the Fontainebleau last summer, he unveiled plans to turn the mothballed hotel into a Marriott-managed resort called The Drew. But if Richard “Boz” Bosworth’s plans didn’t fall through, the north Las Vegas Strip tower could have become a Waldorf Astoria with several floors of timeshare units. (Eli Segall/Las Vegas Review-Journal)
LVCVA CEO Rossi Ralenkotter announces plans to retire
Rossi Ralenkotter, CEO of the LVCVA, on Tuesday confirmed a Las Vegas Review-Journal report that he is preparing to retire. Richard N. Velotta/ Las Vegas Review-Journal
Cousins Maine Lobster to open inside 2 Las Vegas Smith’s stores
Cousins Maine Lobster food truck company will open inside Las Vegas’ two newest Smith’s at Skye Canyon Park Drive and U.S. Highway 95, and at Warm Springs Road and Durango Drive. Cousins currently sells outside some Las Vegas Smith’s stores and at Fremont Street and Las Vegas Boulevard. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas home prices to continue to rise, expert says
Lawrence Yun, chief economist at the National Association of Realtors, gives homebuyers a pulse on the Las Vegas housing market. (Eli Segall/Las Vegas Review-Journal)
NV Energy announces clean energy investment
The company is planning to add six solar projects in Nevada, along with the state's first major battery energy storage capacity. Bailey Schulz/Las Vegas Review-Journal
3 Mario Batali restaurants on Las Vegas Strip to close
Days after new sexual misconduct allegations were made against celebrity chef Mario Batali, his company announced Friday that it will close its three Las Vegas restaurants July 27. Employees of Carnevino Italian Steakhouse, B&B Ristorante and Otto Enoteca e Pizzeria, all located in The Venetian and Palazzo resorts, were informed of the decision Friday morning. Bastianich is scheduled to visit the restaurants Friday to speak to employees about the next two months of operation as well as how the company plans to help them transition to new positions.
Nevada has its first cybersecurity apprenticeship program
The Learning Center education company in Las Vegas has launched the first apprenticeship program for cybersecurity in Nevada. It was approved by the State Apprenticeship Council on May 15. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas union members voting to authorize the right to strike
Thousands of Las Vegas union members voting Tuesday morning to authorize the right to strike. A “yes” vote would give the union negotiating committee the power to call a strike anytime after June 1 at the resorts that fail to reach an agreement. (Todd Prince/Las Vegas Review-Journal)
Small businesses struggle to find qualified candidates
A 2018 survey found that over two-thirds of small businesses in Nevada find it somewhat to very difficult to recruit qualified candidates. Bailey Schulz/Las Vegas Review-Journal
Nevada secretary of state website offers little protection against fraudulent business filings
Property developer Andy Pham tells how control of his business was easily seized by another person using the secretary of state website.
Caesars may be going solo in its marijuana policy
Several Southern Nevada casino companies aren’t following Caesars Entertainment’s lead on marijuana testing.
How much is the Lucky Dragon worth?
Less than a year-and-a-half after it opened, the Lucky Dragon was in bankruptcy.
Gyms and discount stores take over empty retail spaces
Grocery stores used to draw people to shopping centers. But many large retail spaces have been vacant since 2008. Discount stores like goodwill and gyms like EOS Fitness are filling those empty spaces, and helping to draw shoppers back in. K.M. Cannon/Las Vegas Review-Journal
Funding source of Las Vegas stadium for the Raiders is sound, expert says
The stadium is funded in part by $750 million of room taxes, the biggest such tax subsidy ever for a professional sports stadium. Robert Lang, executive director of Brookings Mountain West and The Lincy Institute at UNLV, says that is a good use of public funds. (Richard Velotta/Las Vegas Review-Journal)
Las Vegas needs light rail, expert says
Robert Lang, executive director of Brookings Mountain West and the Lincy Institute said he is afraid of a "congestion mobility crisis." Las Vegas needs a light rail system, he said, to accommodate the city's growing number of attractions. (Richard Velotta/Las Vegas Review-Journal)
Three takeaways from Wynn Resorts' Earnings Call
Matt Maddox came out swinging in his first earnings conference call as Wynn Resorts chief executive officer, boasting of record Las Vegas quarterly revenues and applicants lining up for work.
Star Wars VR Comes to Las Vegas
Sneak peak at the new "Star Wars: Secrets of the Empire" VR experience at the Grand Canal Shoppes.
Elaine Wynn continues her fight to change Wynn Resorts board
Elaine Wynn, the largest shareholder of Wynn Resorts Ltd., is seeking to kick a friend of her ex-husband Steve Wynn off the company’s board of directors. (Todd Prince/Las Vegas Review-Journal)
Zillow is getting into house flipping in Las Vegas
Las Vegas Review-Journal real estate reporter Eli Segall says flipping houses has waned in popularity after the housing bubble burst.
Ellis Island Buys Mt. Charleston Lodge
Ellis Island, which operates a casino, brewery and hotel just off the Strip, purchased the Mt. Charleston Lodge in early April.
Casinos to be penalized for allowing drug-impaired customers to gamble
Nevada Gaming Commission Chairman Tony Alamo talks about an amendment making casinos subject to the same disciplinary standards of preventing people to gamble if impaired by drugs as they are for letting them play while intoxicated by alcohol.
Terrible Herbst to open large travel center in Southern Nevada
The 50,000-square-foot commercial travel center will include 96 fuel pumps and the third White Castle restaurant in Southern Nevada. Wade Tyler Millward reports.
Art Bell’s Top 10 Shows
A selection of radio host Art Bell’s most popular shows.
Hooters owner talks about room upgrades at his hotel-casino
George Ruff, founder and senior principal of Trinity Hotel Investors L.L.C., owner of Hooters Hotel and Casino in Las Vegas, talks about recent room upgrades at the hotel. K.M. Cannon/Las Vegas Review-Journal
Passengers Discuss Allegiant Air
Allegiant Air passengers voice their views on the airline at McCarran International Airport on April 16, 2018. (Bailey Schulz/Las Vegas Review-Journal)
Longtime Las Vegas attorney John Momot dies at age 74
Criminal defense attorney John Momot, who represented mob figures and even played himself in the movie “Casino,” has died.
Trump Slams Amazon for Not Paying Enough in Taxes
Trump Slams Amazon for Not Paying Enough in Taxes Trump tweeted his concerns about the company on Thursday. This isn't the first time Trump commented on the issues via Twitter. August 2017 December 2017 Amazon did hold back on paying state taxes in 1995, but the company has been routinely collecting state sales taxes since then. In 2016, the company's report from the Securities and Exchange Commission confirmed it paid $412 million in taxes.
TOP NEWS
News Headlines
ad-infeed_1
ads_infeed_2
Local Spotlight
Home Front Page Footer Listing
Circular
You May Like

You May Like